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Gill

What does an insurance broker do?

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I'm keen to review our insurances to see if we can get a better deal. I have looked at a few insurance broker websites and it looks like they kind of become your "agent" and you need to go through them when making claims etc. I am not really looking for that level of service (as I am sure you have to pay ongoing fees for it!) but rather some expertise in the differences between different companies' policies and premiums so I can see whether it is worth switching. Very interested to hear any suggestions or experiences - perhaps it is worth using a broker? Let me know if you think it is!

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Insurance brokers tend to have the best knowledge in the industry, and if you have specific needs or requirements (pre-existing medical for health insurance, or property issues for home insurance etc) they know the best insurers. And yes, you do need to go through them to file a claim, but you have the freedom to get a quote and compare it. I used a broker for life insurance and home insurance and was happy with the outcome. 

Edited by RainyDayRichard
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Insurance is not easy. I recently found out when I reversed, by accident, my HILUX into a crate at Placemakers that my "insured value" isn't what I'm getting paid out! So needless to say I dropped the cover amount!

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Like anything, if you get a good one, its great, if not... well.

They don't get paid in ongoing fees, they get paid an upfront commission when you sign on with them, normally 200% of your first year's premiums. 

By the sounds of what you're wanting - advice about what separates one company from another - getting a broker is the way to go.

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Hi Steve and Gill,

I spotted your comments and was compelled to reply.

It’s important to note there are two types of commission structures available to insurance brokers/advisers.

Steve, the first is as you mentioned with one exception, higher upfront commission with low ongoing commission. The second option is low is upfront commission and higher ongoing commission. Both types of commission are paid by the insurer, not the client. 

In my opinion, the second option is by far the most client centric model as it promotes a service driven culture rather than a sales driven culture. It’s the commission structure my organisation has used for the past six years.

An easy way to find out if your adviser is in it for the long-game is to ask them what their commission structure is. 

I hope this clears up any confusion around adviser remuneration.

 

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